Tax Hurts

I picked up this quote from Hansard . There has been a lot about taxation this week and this gives a good perspective in my view


Mr Dorrell ... there was an unheralded tax increase after the 1997 election and another after the 2001 election. ... Last week, the Institute for Fiscal Studies published a report on the movement of disposable incomes during recent years. It reported that, for the first time since the early 1990s, real disposable incomes fell in 2003–04 compared with 2002–03. Why did they fall? They fell because of the £8 billion tax increase that the Chancellor introduced after the previous general election, having promised beforehand that an increase would not be necessary. ... The Chancellor is very fond of saying that he has not increased rates of income tax. That is a dishonest argument for two reasons. First, it draws a polite veil over the fact that he has increased the rates of national insurance contributions. ... when the Chancellor of the Exchequer talks about tax rates not having gone up, he is wrong on two counts: first, national insurance contributions; and secondly, the unplanned and unfair effect of holding down the allowances and bands in the tax system and not indexing them to earnings.